UK needs a feed in tariff for exported electricity produced by CHP
The UK should follow the example being shown by Germany, which is taking radical steps to stimulate its already relatively healthy market for microgeneration and renewable technologies, according to leading British sustainability experts.
German domestic and commercial users of combined heat and power (CHP) and photovoltaics (PV) already receive a guaranteed premium price for any electricity they generate themselves and sell back to the grid. From January 1 next year they will receive an additional financial incentive with the introduction of a payment for using their own electricity.
CHP owners will receive between 11.59 and 13 Euro cents for every kWh they generate made up of a quarterly agreed price from their utility company, an ‘avoided network usage’ payment for not taking power from the Grid and an additional CHP bonus of 5.11 cents.
PV users receive 49 cents because of the far higher cost of buying and installing PV systems.
The German parliament has just passed the CHP Act, which guarantees these generous feed-in and own usage tariffs until 2016 allowing users to invest in CHP engines with confidence.
At the same time, Germany has introduced a 10 per cent surcharge on fossil fuels providing further incentive for users to invest in alternative energy sources.
German utility companies have the responsibility for administering the feed-in system and making the payments to individual users. This avoids the bureaucracy and complexity issues that discouraged so many UK consumers from claiming their grants under the Clear Skies and Low Carbon Buildings Programme. In Germany, the utility pays and then claims the money back from the Government.
Private grid
Germany is trying to create a localised ‘private’ grid system made up of thousands of individual microgenerators to reduce dependence on large, centralised power stations. Such a network is already up and running in part of the Black Forest.
“Feed-in tariffs are proving extremely successful in Germany and I would urge the UK to consider a similar system,” says Matt Johler, export manager of Baxi-SenerTec, the UK owned CHP manufacturer based in Bavaria.
“In 1999 the German market was very similar to the UK market today, but the incentives have totally transformed the commercial environment in favour of microgeneration. Under the new regulations, microgenerators now have the same rights as the large utility companies and power stations.”
SenerTec has sold more than 18,000 CHP engines across Europe, but the majority have remained in Germany because of the favourable market conditions there for low carbon technologies.
“CHP has the best payback of any of the sustainable technologies whatever the market conditions,” says Mike Malina, consultant to the M&E Sustainability campaign. “The German model is an ideal one for the UK to follow because it shows what can be achieved by using financial incentives.
“If the UK government is serious about cutting carbon emissions and improving our security of energy supply, it must stand up to the utility companies and impose a feed-in tariff system that guarantees consumers a fair price for energy they generate themselves.”
Currently UK microgenerators do not receive a guaranteed price for the electricity they sell back to the Grid. In fact, in many instances they receive no payment at all.
“I'm highly envious of the German feed-in tariff for CHP,” says Phil Jones, chairman of the CIBSE CHP Group. “If we had anything like this in the UK then our industry would be far less hungry. “Relatively speaking we are a like a size zero in comparison to our continental friends and need feeding up…or in. I think that community wide CHP is the way to go - more efficient and cost effective than individual units plus it gathers together heat loads to form a larger base load, which is good for CHP. Let's hope for a big feed soon!”
Misguided
Opposition politicians seem to agree with the industry view. Liberal Democrat leader Nick Clegg says:
“Rather than pursuing an expensive and misguided policy to build new nuclear capacity, the Government should be moving to rapidly expand CHP. There can be no excuses not to act: CHP makes environmental and economic sense.”
Mr Clegg called for the climate change levy exemption for CHP to be extended beyond 2012. He also welcomed a Greenpeace commissioned report that showed the UK could generate as much electricity as 10 nuclear power stations by increasing the capacity of nine existing large scale CHP installations. The report, carried out by Poyry Energy Consulting, also made the case for smaller scale, or mini, CHP by pointing out that businesses installing or extending CHP could cut their energy bills by over £1bn and could profit by selling excess electricity and recycling their waste heat.
The amount of CHP generated in the UK has nearly doubled in the past decade, from 3.68GW in 1998 to 5.55GW in 2006. But Graham Meeks, director of the Combined Heat and Power Association, believes the government can do more to ensure the technology reaches its full potential: "Without effective and enduring incentives to make these investments, our next generation of power stations will simply replicate the failings of the past and continue with a needless waste of valuable heat.”
Most industry observers concur that CHP is a safe bet and one of the most appropriate low carbon solutions for the UK.
“CHP is an extremely mature technology that is enjoying a renaissance in many parts of Europe,” says David Shaw, business manager of Baxi-SenerTec (UK). “It really works and does not depend on weather or ground conditions or any other unpredictable factors. It is also not a borrowed technology, but is designed specifically for the purpose.”
Using reliable internal combustion engine technology, the CHP unit generates electricity while it is running and produces heat as a by-product, which is captured and used for water and space heating in a wide range of buildings. By generating power at, or close to, the point of use, it avoids the massive wastage of central power stations, which lose around two thirds of their power in waste heat and transmission losses.
Greenpeace points out that the heat is a crucial element as that accounts for 49 per cent of the country’s overall energy demand. It added that CHP had been “neglected” by the UK when it should have been a key component of our energy mix.
The Carbon Trust has carried out extensive field trials in the UK over the past two years concluding that “a mini-CHP unit can provide savings of between 15 and 20 per cent when it is applied as the lead boiler”. It works best in applications with high and continuous heating loads like hospitals, leisure centres, sheltered accommodation, fire stations, homes with swimming pools and so on as the longer it is running the more efficient it is.
Subsidy
The UK remains the exception when it comes to providing incentives for microgeneration, according to Mr Shaw.“We are almost alone in Europe in having no policies aimed at providing continuous support for a mass market for microgeneration technologies,” he says. “We estimate that a 25 per cent capital subsidy for CHP would lead to 18 million units being installed by 2030. This would reduce the country’s CO2 emissions by 24 million tonnes a year and eliminate the need for the proposed new generation of nuclear power stations.“Gas-fired CHP is the most appropriate microgen technology for the UK as we have a relatively plentiful supply of natural gas and it can be easily retrofitted to existing heating systems,” adds Mr Shaw.Many experts suggest that a minimum feed-in tariff of 5p/kWh should be imposed to give consumers the incentive to produce their own electricity. However, this proposal was voted down in the debate over the UK Energy Bill this year and, although the House of Lords is considering amendments, only PV is being considered as a potential beneficiary of feed-in tariffs.
Many people remain hopeful that the evidence presented by Greenpeace and the example set by other European countries like Germany – and also Denmark, which derives 40 per cent of its power from CHP – will allow common sense to prevail. We may yet see a change of direction on feed-in tariffs and other incentives for CHP of all sizes.
www.baxi-senertec.co.uk
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Germany sets the standard
